Certified Government Financial Manager (CGFM) Practice Exam 2025 - Free CGFM Practice Questions and Study Guide

To determine the average receivables, the correct approach is to take the sum of the beginning of the year receivables and the end of the year receivables and divide it by two. This method provides a simple way to estimate the average amount of receivables over the period, which can help in assessing cash flow and determining the adequacy of the receivables management.

Calculating the average involves accounting for both the starting level of receivables and the ending level, giving a balanced view across the entire period. This method is particularly useful in financial analysis, as it smooths out fluctuations that might occur in receivables over the course of the year.

Other methods mentioned might look at specifics of transaction counts or consider only a snapshot in time without providing a comprehensive average over the fiscal period. Using only beginning or end balances fails to capture the potential changes in receivables activity throughout the year, which could provide a skewed perspective on average receivables. Thus, the chosen method reflects a more accurate measure of the average accounts receivable outstanding during the evaluation period.